Biomass producer Big Island Carbon files Chapter 7 bankruptcy

Big Island Carbon LLC, which spent some $50 million to build a biomass plant to turn Hawaii-grown macadamia nut shells into granulated activated carbon, has filed for Chapter 7 bankruptcy.

The company, which has not started commercial operations at the Kawaihae plant, has laid off all 25 employees, including CEO Rick Vidgen, who was let go on Oct. 9 along with Chief Operating Officer Fred Baker and Controller Gerald Gruber, according to documents filed with the U.S. Bankruptcy Court in Delaware, where the bankruptcy was filed on Nov. 5.

Vidgen declined to comment on the bankruptcy filing.

Big Island Carbon listed secured claims of $16.4 million, which includes a $5 million loan from Synergy Bank in McKinney, Texas, and $11.4 million in principal and interest to Kona Investment Holdings LLC, an entity created by Boston-based Denham Capital Management, which is the project’s majority owner and secured lender.

Adam Carte, an operating partner for Denham Capital, said the Big Island Carbon project — whose price tag started at $20 million before more than doubling to $50 million — ran out of funding, and the board of directors chose to file for bankruptcy while still searching for new investors.

Denham Capital has invested about $45 million in the project, both in the form of investment equity and a secured subordinate loan, Carte said.

The plant is nearly complete, and the company needs about $5 million more to finish it, along with funding for startup operations, he said.

A trustee appointed by the court likely will seek a buyer for the company’s assets.

“We expect a buyer may continue to build the plant,” Carte told PBN.

A meeting of the creditors in the case is scheduled for Thursday in Wilmington, Del.

Big Island Carbon also owes almost $396,000 in unsecured claims to dozens of local and Mainland companies, including $150,000 owed to the Department of Hawaiian Home Lands, according to court documents.

The company also owes $54,327 to Wesley Segawa & Associates in Hilo, $11,375 to Allied Machinery in Waipahu on Oahu, $10,800 to Tinguely Development of Kailua-Kona, and $2,691 to Current Events in Kailua-Kona, according to court documents.